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Ladhabhai Damjibhai Panara Versus Principal Commissioner of Income-Tax, & 1

2017 (9) TMI 838 - GUJARAT HIGH COURT

Pre-deposit - Limit the requirement of predeposit pending petitioner's appeal against the order of assessment to 15% of the demand came to be rejected - rejecting the request of the petitioner was that he could not demonstrate any financial hardship - Held that:- Financial hardship need not be the sole ground on which increase in predeposit of 15% can be opposed. Further, if the petitioner was not interested in personal hearing, his written submissions could and should have been taken into consi .....

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fficer to increase the demand from the petitioner, confirmed the demand rejecting the petitioner's objections. This was in breach of principles of natural justice. When the petitioner had no idea on what grounds the authorities primafacie thought that the standard formula of granting stay on depositing 15% of the disputed tax demand would not be appropriate, it was incumbent upon the Revenue to put such reasons to the petitioner enabling the petitioner to meet with such grounds and oppose higher .....

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VAISHNAV, JJ. For The Petitioner : MS VAIBHAVI K PARIKH, ADVOCATE For The Respondent : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged an order dated 30.06.2017 passed by the Principal Commissioner of Income Tax, Valsad, under which, the request of the petitioner to limit the requirement of predeposit pending petitioner's appeal against the order of assessment to 15% of the demand came to be rejected. The Principal Commiss .....

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order under section 143(3) of the Act on 30.12.2016 determining total income of the petitioner at ₹ 3,38,00,260/. In such order the Assessing Officer made sizable additions. Resultantly, the tax demand of ₹ 1,34,09,720/arose. The petitioner paid 15% thereof i.e. ₹ 20,12,000/on 28.01.2017 and requested for suspension of the rest of the disputed demand pending appeal which the petitioner filed on 31.01.2017. 4. The Assessing Officer however under a letter dated 04.05.2017, convey .....

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eyance till disposal of the appeal. The Principal Commissioner by the impugned order, rejected such a request on the ground that in terms of para 4(B)(a) of the CBDT circular dated 29.02.2016, it was open for the authorities to increase the demand pending appeal above 15%. He was of the opinion that the examples cited in the said subpara are not exhaustive. He noted that the assessee had not submitted any documentary evidence showing financial hardships. He also recorded that the petitioner was .....

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Commissioner of Income Tax (Appeals), the CBDT in its circular dated 29.02.2016 has issued certain guidelines. Relevant portion of this circular reads as under: 3. It has been reported that the field authorities often insist on payment of a very high proportion of the disputed demand before granting stay of the balance demand. This often results in hardship for the taxpayers seeking stay of demand. 4. In order to streamline the process of grant of stay and standardize the quantum of lump sum pay .....

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ssessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or, (b) the assessing officer is of the view .....

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demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand. (C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer. (D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. .....

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hich the stay order will be cancelled. (ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations: (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245. 7. Pe .....

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ing amount pending appeal before the appellate Commissioner. Two main purposes for issuance of circular therefore were to obviate the hardship of the tax payers and to standardize the quantum of lumpsum payment is required to be made. 8. In this background, if we peruse the guidelines, clause (A) of para 4 prescribes as a general thumb rule insistence of collecting 15% of the demand pending appeal, subject to which stay would be granted against recovery of the rest of the amount. Clause (B) of p .....

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of addition leading to demand is such that collection of amount higher than 15% is warranted, the Assessing Officer would refer the matter to the Principal Commissioner who after considering all relevant aspects would decide the quantum of demand to be paid by the assessee to enjoy stay pending appeal. In this subclause, by way of example, it is pointed that such cases requiring collection of higher amount than 15% would be where addition on the same issue has been confirmed by the appellate au .....

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collecting higher (or lower as the case may be) percentage of the disputed demand than the prescribed 15%. Para 3 itself uses the word guidelines which under normal circumstances be understood as directions for general application. Subclause (a) of clause (B) of para 4 itself leaves sufficient discretionary powers. Clause (E) of para 4 permits the Assessing Officer to impose suitable conditions to protect the interest of the Revenue while granting stay against recovery of the further amount. In .....

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would persuade us that the increase of 15% outside of the examples cited in subclause (A) should be in special or exceptional cases after recording reasons. 11. Insofar as the present order is concerned, there are two fundamental flows due to which the same may be set aside. First is that the Principal Commissioner cited the nonappearance of the petitioner during personal hearings as the main ground for rejecting the request for reduction of predeposit. Though he did refer to the petitioner' .....

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